Is there a bubble in dividend-paying defensive stocks? We’ve asked the question here before – we’ve been recommending them for four years or so, so we need to monitor how they’re doing. An article in The Wall Street Journal this week outlined just how popular they are.

Since mid-April, telecoms, utilities, healthcare and consumer staples are the only S&P sectors to have risen. Telecoms are up 14%; utilities 7.5%. Meanwhile, the S&P 500 has fallen 1.2%. “Defensive stocks are trading near a decade-high relative to their more economically sensitive peers” if you look at their price/earnings ratios, says Adam Parker of Morgan Stanley.

Investors are paying around 25% more for stocks that pay dividends than for stocks that don’t. Add that to the fact that US investors have poured a net $16bn into equity income funds since the start of the year (with inflows still rising), and it’s beginning to look like a crowded trade.